Last year, Georgia’s 10 largest public companies paid billions in corporate income taxes.

Close to $9.8 billion, to be exact (see chart, Page 22A).

That’s causing some CEOs to take action. On April 1, 21 CEOs in the RATE Coalition (for “Reforming America’s Taxes Equitably”), including United Parcel Service Inc.’s Scott Davis and Southern Co.’s Thomas Fanning, co-signed a letter to Congress urging reduction of corporate tax rates.

“We write to you today to reinforce the need for comprehensive tax reform in order to improve economic growth and boost job creation,” they said.

The organization aims to lobby Congress to reduce corporate tax rates and includes other Georgia-based members such as The Home Depot Inc. and Cox Enterprises Inc.

Members of the coalition tend to pay high tax rates, compared with other OECD (Organization for Economic Cooperation and Development)-based corporations, the letter said.

“Today, at 35 percent, the top federal statutory corporate tax rate is 10 percentage points above the OECD average and nearly 15 points higher when state and local taxes are included,” stated the letter. “The costs to our economy are significant and already being realized.”

It also referred to Ernst & Young LLP data that “GDP in 2013 is expected to be between 1.2 and 2 percent lower as a result of our OECD-leading corporate tax rate.”

“In an indirect way, these high corporate taxes get passed on to consumers and investors, so I applaud the efforts of these CEOs with RATE,” said Pat Tuley, tax partner with Porter Keadle Moore LLC.

In 2012, The Home Depot Inc. set aside $2.7 billion to pay income taxes. The home improvement retailer is appealing certain proposed Internal Revenue Service examination adjustments for fiscal years 2005 through 2007, with tax returns for 2008 and 2009 under examination by the IRS, it stated in its filing. “Over the next twelve months, it is reasonably possible that the resolution of federal and state tax examinations could reduce our unrecognized tax benefits by $105 million,” it added.

Among large Georgia-based corporations, there’s a major disparity between how each is taxed. For example, The Coca-Cola Co. paid $2.7 billion in income taxes for 2012 — the same as the Home Depot. However, for Coca-Cola, that number was 23.1 percent of its pre-tax profits — its effective tax rate. Home Depot’s effective tax rate was a whopping 37.2 percent.

“A company like Home Depot, which has the majority of its operations in the U.S., will pay upward of 35 percent in taxes, while Coca-Cola has the opportunity to push their income to lower tax jurisdictions,” said Chuck Mulford, professor of accounting at Georgia Tech’s Ernest Scheller Jr. College of Business.

Similarly, Southern Co. also doesn’t have the option to move income overseas. The Atlanta-based electricity giant in 2012 paid $1.3 billion — or 39.1 percent of its pre-tax profit.

“Companies with a majority of U.S. business pay federal and state tax rates upward of 35 percent,” Mulford said. “It is understandable why they would be pushing Congress to examine our corporate tax rates.”

Not all international companies benefit from foreign subsidiaries. Aflac Inc. paid $1.4 billion in income taxes last year. Aflac’s combined U.S. and Japanese effective income tax rate was 33.4 percent in 2012. Although still high, Japan cut its corporate taxes last year.

Another Georgia giant is benefiting from tax rules that let companies take advantage of previous years’ losses to lower their tax bill on a current year’s profits.

Delta Air Lines Inc., which pocketed a $1 billion profit in 2012, paid no federal income taxes last year, and doesn’t expect to “during the next several years,” the company says.

The reason: While it’s profitable now, Delta suffered billions in losses each year earlier in the 2000s. As of the end of 2012, it had $16.3 billion of U.S. federal pre-tax net operating loss carryforwards. Delta’s U.S. federal pre-tax net operating loss carryforwards do not begin to expire until 2022.

Coca-Cola Enterprises Inc. paid$160 million in income taxes last year — an effective rate of 19 percent. Most of the bottler’s operations are based in Europe.

UPS paid $167 million in income tax in 2012, down from nearly $2 billion a year earlier. However, it paid $2.3 billion in its adjusted income tax, of which $1.8 billion was paid in pension plan adjustments that were not included in the company’s income statements. The company’s effective tax rate halved from a year earlier — 17 percent for 2012 “largely due to the significance of U.S. Federal tax credits and the proportion of taxable income in certain non-U.S. jurisdictions relative to total pre-tax income,”it stated.

Beginning in 2012, the company received a tax incentive for certain non-U.S. operations, effective through Dec. 31, 2017, that may be extended through 2022 “if additional requirements are satisfied,” it stated. “The impact of this tax incentive decreased non-U.S. tax expense by $22 million.”

Income taxes paid by Georgia’s 10 largest companies

Company

2010

2011

2012

The Home Depot Inc.

$1,935,000,000

$2,185,000,000

$2,686,000,000

United Parcel Service Inc.

$1,952,000,000

$1,972,000,000

$167,000,000

The Coca-Cola Co.

$2,370,000,000

$2,812,000,000

$2,723,000,000

Delta Air Lines Inc.

NA

NA

NA

Aflac Inc.

$1,233,000,000

$1,013,000,000

$1,436,000,000

Southern Co.

$1,026,000,000

$1,219,000,000

$1,334,000,000

Genuine Parts Co.

$286,272,000

$325,690,000

$370,891,000

SunTrust Banks Inc.

NA

$79,000,000

$773,000,000

AGCO Corp.

$104,400,000

$24,600,000

$137,900,000

Coca-Cola Enterprises Inc.

$122,000,000

$196,000,000

$160,000,000

$9,028,672,000

$9,826,290,000

$9,787,791,000

Source: Form 10-Ks filed by the companies with the Securities and Exchange Commission.

Ruchika covers banking and finance.

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